China’s National Food and Strategic Reserves Administration said on its website that it would conduct the first set of auctions to release crude oil from the country’s strategic reserve on September 24. In the first auction, the NFSRA would sell 7.38 million barrels of oil which include Qatar Marine (951,137 barrels), Forties (1,095,565 barrels), Oman (1,790,957 barrels), Murban (2,953,927 barrels), and Upper Zakum (592,031 barrels) in five lots.
While the volume in the first auction is relatively small, it has the market wary about China’s potential next move to curb oil prices. Beijing is carrying out measures to ease soaring commodity prices to help local manufacturers. Analysts said the release of state crude reserves demonstrate that China is determined to intervene to cool down overheated oil prices. They also said that China’s policy would likely prevent oil prices from sustainably climbing above $80 per barrel.
China does not publish the amount of oil in its strategic reserves. However, industry experts estimated it at around 220 million barrels. According to them, Beijing might release more barrels in more frequent auctions next year. However, they also warned that it could trigger retaliation from producers.
